Investing in quality growth stocks is a popular strategy for those with a sizeable risk appetite. Typically, growth stocks trade at a steep valuation during bull markets due to their stellar forecasts. Alternatively, they trail the broader markets significantly when sentiment turns bearish due to decelerating growth rates and panic selling.
Given investor sentiment is expected to improve in the next 12 months, here are three top growth stocks that are screaming buys right now.
AtkinsRealis stock
Valued at $7.4 billion by market cap, AtkinsRealis (TSX: ATRL) operates as an integrated professional services and project management company. Down 30% from all-time highs, the TSX stock has almost doubled in the last three years.
As the world is transitioning towards clean energy, several companies are focusing on and investing in energy security and transition, acting as secular tailwinds for ATRL’s engineering services and nuclear businesses.
Formerly called SNC-Lavalin, AtkinsRealis sales grew 24.4% year over year to $2 billion in the third quarter (Q3). While engineering services revenue was up 29%, the nuclear segment increased the top line by 23.4% in Q3. The company ended Q3 with adjusted EBIT (earnings before interest and tax) of $187.1 million, indicating a margin of 9.2%.
Priced at 27 times forward earnings, ATRL stock is reasonably valued and trades at a discount of 18% to consensus price target estimates.
Softchoice stock
Valued at $938 million by market cap, Softchoice (TSX: SFTC) is a tech stock flying under the radar. In Q3 of 2023, Softchoice increased adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) by 48.8% to $22.7 million, while operating income almost tripled to $18.3 million year over year.
A widening earnings base allowed the company to return $39 million of capital to shareholders via dividends and buyback in the September quarter. Moreover, in the last 12 months, Softchoice’s operating cash flow stood at $96.2 million, allowing it to reduce net debt by $63 million. It ended Q3 with a net leverage ratio of 1.1 times, lower than the year-ago multiple of 2.1 times.
Softchoice is an enterprise-facing information technology solutions company that continues to expand its customer base. It emphasized demand from mid-market customers for its portfolio of mission-critical solutions remains robust, resulting in higher retention rates.
Softchoice pays shareholders an annual dividend of $0.44 per share, indicating a yield of 2.8%. Priced at 14 times forward earnings, SFTC stock trades at a discount of 30% to consensus price target estimates.
Tidewater Midstream and Infrastructure stock
The final TSX growth stock on my list is Tidewater Midstream and Infrastructure (TSX: TWM), which also offers you a tasty dividend yield of 3.9%. Tidewater aims to build a diversified midstream and infrastructure company with a focus on commodities such as natural gas, natural gas liquids, crude oil, refined products, and renewable energy.
To provide customers with a vertically integrated value chain, Tidewater acquires and develops energy infrastructure, which includes downstream facilities, natural gas processing facilities, natural gas liquids infrastructure, pipelines, export terminals, and other clean energy projects.
In the last three quarters, Tidewater reported a distributable cash flow of $9.3 million. Given it paid shareholders over $12 million in dividends, Tidewater will need to increase cash flows to sustain these payouts over time.
Analysts tracking the TSX stock expect shares to surge 25% in the next 12 months.
